In 2020, Ibran Corp. required additional cash for its business. Management decided to use accounts receivable to raise the additional cash and has asked you to determine the income statement effects of the following transactions:
1. On July 1, 2020, Ibran assigned $600,000 of accounts receivable to Provincial Finance Corporation as security for a loan. Ibran received an advance from Provincial Finance of 90% of the assigned accounts receivable less a commission of 3% on the advance. Before December 31, 2020, Ibran collected $220,000 on the assigned accounts receivable, and remitted $232,720 to Provincial Finance. Of the latter amount, $12,720 was interest on the advance from Provincial Finance.
2. On December 1, 2020, Ibran sold $300,000 of accounts receivable to Wunsch Corp. for $275,000. The receivables were sold outright on a without recourse basis and Ibran has no continuing interest in the receivables.
3. On December 31, 2020, an advance of $120,000 was received from First Bank by pledging $160,000 of Ibran's accounts receivable. Ibran's first payment to First Bank is due on January 30, 2021. Instructions a. Prepare a schedule showing the income statement effects of 1004 these transactions for the year ended December 31, 2020.
Instructions
a. Prepare a schedule showing the income statement effects of
these transactions for the year ended December 31, 2020.
In: Accounting
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $341,000. Amortization associated with this acquisition is $17,400 per year. In 2021, Lindman earns an income of $159,000 and declares cash dividends of $53,000. Previously, in 2020, Lindman had sold inventory costing $47,200 to Matthew for $59,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $60,800 to Matthew for $80,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022.
What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman?
What is the equity method balance in the Investment in Lindman account at the end of 2021?
In: Accounting
List and describe major systematic factors that had major influence over the Australian stock exchange from March 2020 to May 2020. These influences can be good or bad.
In: Finance
Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow:
| Selling price per unit on the intermediate market | $ | 46 |
| Variable costs per unit | $ | 16 |
| Fixed costs per unit (based on capacity) | $ | 9 |
| Capacity in units | 65,000 | |
Sako Company has a Hi-Fi Division that could use this speaker in
one of its products. The Hi-Fi Division will need 10,000 speakers
per year. It has received a quote of $30 per speaker from another
manufacturer. Sako Company evaluates division managers on the basis
of divisional profits.
Required:
1. Assume the Audio Division is now selling only 55,000 speakers per year to outside customers.
a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?
b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 10,000 speakers from the Audio Division to the Hi-Fi Division?
2. Assume the Audio Division is selling all of the speakers it can produce to outside customers.
a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?
b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 10,000 speakers from the Audio Division to the Hi-Fi Division?
In: Accounting
Identify a person you know who has an immune system disorder or cancer. Review content in your text for potential types of disorders.
Interview the affected person and write a 3-5 page paper identifying your findings including:
Questions you may want to use to guide your interview:
In: Nursing
In: Accounting
At the end of 2019, Splish Brothers Inc. has accounts receivable of
$778,100 and an allowance for doubtful accounts of $63,200. On
January 24, 2020, the company learns that its receivable from Megan
Gray is not collectible, and management authorizes a write-off of
$7,400.
1) Prepare the journal entry to record the write-off.
2) What is the cash realizable value of the accounts receivable (1) before the write-off and (2) after the write-off?
In: Accounting
In: Operations Management
A company incurred the following costs in year 1 to fulfill a contract that is expected to take two years to complete:
Other information:
The equipment was acquired for the contract, but will have other use to the company when the contract is complete. It is expected to have a ten-year useful life with no residual value. The revenue from the contract will be recorded at the end of two years, when control transfers (i.e., point in time).
How will the above costs be accounted for in year 1? Does the answer change if period of time criteria is met?
In: Accounting
In: Nursing